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Self-invested personal pensions (SIPPs)

A self-invested personal pension (SIPP) is a pension ‘wrapper’ that holds investments until you retire and start to draw a retirement income. It is a type of personal pension and works in a similar way to a standard personal pension. The main difference is that with a SIPP, you have more flexibility with the investments you can choose.

A SIPP allows you to manage your own investments and therefore opens up a range of options particularly for business owners. A SIPP can be used as a form of pension-led funding to inject capital into your business.

Under normal circumstances, you need to be 55 to access your pension fund. However, there is generally no minimum age for the funds being accessed via the pension-led funding route. What’s more, if your company has other owners, their pension pots can be amalgamated to invest in the business.

There are several ways you can use a SIPP to invest in your business. One of the most popular is to purchase commercial property, either outright or partially. You could also loan the company some money on commercial terms meaning the money could be returned with interest. Another option is to purchase shares in the company.

A SIPP also carries significant risk as any business failures could have a drastic impact on your retirement finances.

If you’re interested in using a SIPP, speak to one of our advisers who can talk to you about your options.

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